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Venezuela faces a default due to US sanctions

26.10.2017Monday October 23rd, 2017dev

According to Bloomberg, Venezuela faces a default on bonds, which could occur if the sanctions are tightened by the United States. Information on the possible introduction of additional sanctions appeared immediately after the elections to the Constitutional Assembly and amendments to the legislation of Venezuela.

Sanctions are directed against Nicholas Maduro – the incumbent president of the Latin American country. Previously, the US Minister of Finance announced possible steps in the form of freezing assets of Nicholas Maduro.

After this statement, the dollar bonds Petroleos de Venezuela SA noticeably declined in price. Analysts also discuss the possibility of embargo on oil products, imported into the country, and even a complete ban on trade. The ban on the import of oil into Venezuela is not so likely.

However, Venezuelan oil companies may lose an access to the US banking system, which will also entail a number of negative consequences for the country’s economy. In general, this situation can lead to a serious economic crisis and even default. The likelihood of imposing new sanctions is only being discussed by the US authorities and analysts can only guess about possible consequences.